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44 Cards in this Set
- Front
- Back
Sources of stockholder's equity
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1.Paid in Capital
2.Retained Earnings 3.Accum OCI |
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Paid in Capital
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Amounts invested by shareholders
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retained earnings
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amounts earned by shareholders
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Accum Other Comprehensive Income
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non-owner changes in equity
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common stockholder
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a. Voting Rights.
b. Share in profits when dividends are declared. c. Share in the distribution of assets if the company is liquidated. |
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preferred stockholder
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a. Dividend and Liquidation preference over common stockholders.
b. No voting rights. c.reedemable |
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Features of preferred stock
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1.can be converted into common stock
2. dividends |
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Dividends
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a. Stated dollar amount OR percent of par
b.may be cumulative or non-cumulative c.unpaid dividends on cumulative preferred stock must be paid before any distributions to common shareholders |
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Redemable Preferred stock
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1.has debt and equity features
2.mandatory redemption period 3.classified as debt by FASB 150 4.previously a mesadain item |
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Stock Issued for Cash
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Investment is allocated between par value and paid in capital
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common stock is always reported at ____ value. Diff is _____
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par, paid in capital
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Non-cash stock transactions
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The transaction should be recorded at the fair value of either the shares or the noncash consideration, whichever is more clearly evident.
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Share Issue Costs
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Legal, printing, and accounting fees necessary to sell shares
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Share Issue Costs reduce the
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cash proceeds and paid-in capital
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Purposes of reaquisition of shares
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a.Decrease supply of shares in the market to support price of remaining shares.
b.Increase earnings per share. c.To provide stock for stock compensation agreements. |
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DB CR for Issuance of Stock
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cash 1,000
Common stock (par)100 Paid-In Cap (diff)900 |
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Treasury Stock is a reduction in
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stockholder's equity
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Treasury stock uses the ___ method
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cost
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DB CR Aquisition of treasury stock
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Treasury stock xxx
Cash xxx |
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DB CR Sale of Treasury stock BELOW Cost
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Cash XXX
PIC Treasury StockXXX Treasury Stock (cost)XXX |
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DB CR Sale of Treasury stock ABOVE Cost
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Cash XXX
Treasury Stock (cost) XXX PIC Treasury Stock XXX |
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Special rule for PIC Treasury stock when sold BELOW cost
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only debit this account to the extent of its credit balance; use retained earnings for difference
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DB CR if sell BELOW cost with extra credit
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Cash 10
Retained earnings (bal) 1 PIC from treasury stock 2 Treasury stock (cost) 10 |
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Retained Earnings represents
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accumulated, undistributed Income or Loss
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Dividends __________ retained earnings
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reduce
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cumulated deficit
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A debit balance in retained earnings is considered a deficit
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Registered owners at the date of ________, are entitled to dividends
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record
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DB CR Declaration date of cash dividends
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Retained Earnings XXX
Cash Dividends Pybl XXX |
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No dividends are declared or paid on ____________
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treasury stock
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Property Dividend features
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1.the Fair market vale of assets to be distributed/recorded is used
2.adjust the asset to fair value, which results in a gain or loss |
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DB CR to record gain on property dividends on declaration date
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Investment in pref stock X
Gain on appr. of Inv X |
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DB CR to record property dividends on distribution date
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Prop dividends pybl X
Inv in pref stock X |
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What happens with a stock dividend?
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1.additional shares of stock are distributed
2.each stockholder's % stays the SAME |
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Accounting for stock dividends depends on
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if its small or large
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Small stock dividend is recorded at
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fair value
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large stock dividend is recorded at
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par value
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DB CR for small stock dividend
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Retained Earning (FAIR VALUE)
Common stock (par) PIC excess of par |
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DB CR for large stock dividend
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Retained earnings (par)
Common stock (par) |
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why have a stock split?
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if investors are concerned the stock is overvalued
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stock split typically has no journal entry because
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Total stock remains the same, companies adjust par value
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What do we need to see on the balance sheet?
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1.classes of capital stock (including: par value, # of shares authorized and issues)
2.Paid-In capital Accounts 3.Retained earnings 4.Accumulated OCI |
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What do we need to see on the stmt of stockholder's equity?
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Changes in each equity line item (columnar format) – including capital stock, paid-in capital, retained earnings, accumulated other comprehensive income)
1.Beginning Balance 2.Additions 3.Deductions 4.Ending Balance |
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The balance sheet shows the ___________ activity of the year
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point in time, at end of year
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What are required disclosures?
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1.Dividend and Liquidation Preferences on P/S
2.Call and Conversion Information on P/S 3.Preferred Dividends in Arrears 4.Restrictions on Retained Earnings |